After Craven County v. Boyles, do local school districts have a claim to the parking and library fines that UNC campuses collect, or are those fines structured differently from the civil penalties Craven County reached?

Plain-English summary

Richard Robinson, legal counsel for the UNC President's office, asked the AG to address an interpretive question created by the NC Supreme Court's 1996 decision in Craven County Board of Education v. Boyles, 343 N.C. 87. Craven County had construed Article IX, Section 7 broadly: any monetary payment exacted as punishment for violation of a state penal law (civil or criminal) belongs to the local school districts. UNC campuses collected substantial library fines ($840,674 in FY 1995-96 across all constituent institutions) and parking fines ($3,766,102 in the same year). Did Craven County mean the schools had to send those amounts to the local school districts?

Chief Deputy AG Andrew Vanore and Assistant AG Celia Grasty Jones concluded no, for two different reasons.

Library fines: not punitive. Library fines are charged for late return of borrowed materials and as replacement charges for lost items. UNC uses the funds for library collection maintenance and replenishment. The fines are remedial (they make the library whole) rather than punitive (they do not exact monetary punishment for a breach of penal law). The AG cited Shore v. Edmisten, 290 N.C. 628 (1976), for the principle that payments imposed for restitution to a governmental agency are not within Article IX, Section 7. The library fines fit that description.

The opinion also pulled in Foy v. University of North Carolina, 5 N.C. 80 (1805), and the historical constitutional mandate that UNC promote "useful learning" with tuition as low as practicable (Art. IX, § 9). Construing the constitution as a consistent whole (per Thomas v. State Board of Elections, 256 N.C. 401), the library-fines question becomes a question of which constitutional provision controls. Section 7 funds the public schools; Section 9 directs the General Assembly to keep UNC affordable. Library fines, which fund library collections that serve UNC's educational mission, fit Section 9, not Section 7.

Parking fines: administrative versus criminal enforcement. UNC parking fines come in two flavors under G.S. § 116-44.4. Subsection (g) lets constituent institutions treat parking violations as infractions under § 14-3.1, prosecuted in District Court. Infraction-route fines go to the county for the public schools per § 14-3.1(a) and § 15A-1114, § 15A-1116. The infraction route is not at issue.

Subsection (h) is different. It lets the institutions use their own administrative enforcement (citations adjudicated internally with civil penalties imposed by the institution). All UNC constituent institutions reporting to the AG used this route. Subsection (m) directs the resulting funds into a trust account used for parking and transportation purposes on the campus.

The AG concluded that subsection (h) parking fines fall outside Article IX, Section 7 because they are an exercise of the General Assembly's Article IX, Section 8 authority "to enact laws necessary and expedient for the maintenance and management of The University of North Carolina." When the legislature designates a class of penalties for university maintenance, the school districts cannot use Section 7 to redirect them. Reading Section 7 to invalidate § 116-44.4(m) would create a constitutional conflict between Section 7 and Section 8, and the court is required to resolve such doubts in favor of the statute's validity (citing Martin v. State, 330 N.C. 412 (1991), State v. Pool, 74 N.C. 402 (1876), Lowery v. School Trustees, 140 N.C. 33 (1905), and State v. White, 58 N.C. App. 558 (1982)).

The opinion acknowledges judicial uncertainty on the library-fines point: "while a judicial exemption for the university library fines from article IX, section 7 cannot be predicted with certainty, such an exemption would be consistent" with the case law and the Section 9 mandate. The parking-fines conclusion is stated with more confidence because of the explicit Section 8 authority backing § 116-44.4(h).

Currency note

This opinion was issued in 1997. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The Article IX, Section 7 case law has continued to evolve since 1997, with the NC Supreme Court refining the punitive-versus-remedial distinction. The Civil Penalty and Forfeiture Fund framework (G.S. § 115C-457.1 et seq., enacted in 1997) changed the routing for many civil penalties. Anyone analyzing a current question about whether a particular university or state agency revenue stream is Article IX, Section 7 money should review the current case law and statutory framework, not just this 1997 advisory letter.

Background and statutory framework

Article IX of the NC Constitution allocates resources between the public schools (Sections 1 through 7), higher education (Sections 8 through 10), and related educational structures. Section 7 is the school-fund provision: "the clear proceeds of all penalties and forfeitures and of all fines collected in the several counties for any breach of the penal laws of the State" belong to the counties and must be used for public schools. Section 8 gives the General Assembly authority to maintain UNC and the other public higher-education institutions. Section 9 directs the General Assembly to provide higher education "as far as practicable . . . free of expense."

These provisions can pull in different directions. Craven County construed Section 7 broadly enough to capture civil environmental penalties. After Craven County, every state revenue stream that looked punitive was potentially Section 7 money. UNC's library and parking fines were obvious candidates for that analysis.

The opinion threads the needle by leaning on the constitutional framework's internal balance. Library fines are not punitive in character. Parking fines collected administratively under § 116-44.4(h) are authorized by Section 8 and are not "collected in the several counties" in the way Section 7 contemplates; they are collected by UNC institutions under specific Section 8 authority.

The infraction-route distinction is important. The General Assembly could have made all parking violations infractions, in which case the resulting fines would clearly be Section 7 money. By creating an administrative-enforcement option (subsection (h)) and directing the resulting funds to university trust accounts (subsection (m)), the legislature created a class of penalties intentionally outside the public-schools pipeline. The AG's reading respects that legislative design.

Common questions

Did this opinion settle the question for all UNC revenue streams?

No. It addressed library fines and parking fines specifically. Other UNC monetary penalties (e.g., student disciplinary fines, traffic fines beyond parking, academic late fees) would have to be analyzed under the same framework: punitive or remedial, and what was the source of legislative authority. The opinion's two-track analysis (Section 7 capture of punitive penalties; Section 8 carve-out for university-maintenance revenue) provides the template.

What if UNC had used the infraction route?

Then the resulting fines would clearly belong to the public schools under § 14-3.1(a). The opinion notes that all reporting constituent institutions chose the subsection (h) administrative route, presumably for revenue retention reasons. The legislative design gave the institutions the choice and they made it.

How did this interact with the 1997 Civil Penalty and Forfeiture Fund?

Late in 1997 (after this opinion), the General Assembly enacted G.S. § 115C-457.1 through -457.3, creating the Civil Penalty and Forfeiture Fund to route Article IX, Section 7 money through the State School Technology Fund. That framework changed the destination of post-Craven County funds. The UNC library and parking fines analyzed here, if they fell outside Section 7 (as the AG concluded), would not have been touched by the new framework. Other UNC penalty streams that fell within Section 7 would have routed through the new Fund.

Did the school districts challenge UNC's retention of the fines?

The opinion does not indicate any pending litigation. Craven County had triggered a broad reassessment of state agency revenue streams. This advisory letter was UNC's pre-emptive analysis. The reasoning would have been UNC's defense in any subsequent litigation.

What was the Shore v. Edmisten principle?

Shore v. Edmisten, 290 N.C. 628 (1976), held that payments imposed for purposes of restitution to a governmental agency are not part of the "clear proceeds" of fines under Article IX, Section 7. The principle separates compensatory or remedial payments from punitive ones. Library fines, used to maintain library collections damaged or kept past return dates, are restitutional in character.

What was the historical context behind the constitutional framework?

The opinion's citation to Foy v. University of North Carolina, 5 N.C. 80 (1805), reaches back to the constitutional framers' intent that UNC promote "useful learning" (citing the N.C. Constitution of 1776, § 41). The 1971 NC Constitution preserved that university mandate in Article IX, Sections 8, 9, and 10. The opinion uses that historical context to argue that diverting university maintenance revenue to public schools would contradict the framers' deliberate decision to fund both pieces of the public education system.

Source

• Landing page: https://ncdoj.gov/opinions/effect-on-parking-and-library-fines-collected-by-unc-institutions/

Citations

• N.C. Const. art. IX, § 7
• N.C. Const. art. IX, § 8
• N.C. Const. art. IX, § 9
• N.C. Const. art. IX, § 10
• N.C.G.S. § 116-44.4
• N.C.G.S. § 14-3.1
• N.C.G.S. § 15A-1114
• N.C.G.S. § 15A-1116
• Craven County Board of Education v. Boyles, 343 N.C. 87, 468 S.E.2d 50 (1996)
• State ex rel. Thornburg v. 532 B Street, 334 N.C. 290, 432 S.E.2d 684 (1993)
• Cauble v. City of Asheville, 301 N.C. 340, 271 S.E.2d 258 (1980)
• Mussallam v. Mussallam, 321 N.C. 504, 364 S.E.2d 364 (1988)
• Shore v. Edmisten, 290 N.C. 628, 227 S.E.2d 553 (1976)
• State ex rel. Hodge v. Marietta & North Georgia Railroad, 108 N.C. 24, 12 S.E. 1041 (1891)
• Foy v. University of North Carolina, 5 N.C. 80 (1805)
• Martin v. State, 330 N.C. 412, 410 S.E.2d 474 (1991)
• Thomas v. State Board of Elections, 256 N.C. 401, 124 S.E.2d 164 (1962)
• State v. Pool, 74 N.C. 402 (1876)
• Lowery v. School Trustees, 140 N.C. 33, 52 S.E. 267 (1905)
• State v. White, 58 N.C. App. 558, 294 S.E.2d 1 (1982)

Original opinion text

January 28, 1997

Richard H. Robinson, Jr.
Assistant to the President for Legal Affairs
The University of North Carolina
P.O. Box 2688
Chapel Hill, NC 27515

Re: Advisory Opinion; Craven County Board of Education v. Boyles, 343 N.C. 87, 468 S.E.2d 50 (1996): Effect on Parking and Library Fines Collected By Constituent Institutions of The University of North Carolina

Dear Mr. Robinson:

This letter responds to your recent request for an opinion on whether parking and library fines collected by constituent institutions of The University of North Carolina (UNC) constitute "fines," "penalties" or "forfeitures" subject to claim by the various local school districts under article IX, section 7 of the North Carolina Constitution. In particular, you expressed concern with the decision in Craven County Board of Education v. Boyles, 343 N.C. 87, 468 S.E.2d 50 (1996), in which the North Carolina Supreme Court held that the local school districts may claim all monetary payments exacted as penalties that accrue to the State from the violation of either civil or criminal law.

It is our opinion that, insofar as the library fines are imposed for purposes other than punishment, and UNC generates and uses the parking fines pursuant to the General Assembly's constitutional mandate to maintain and manage UNC as a public institution of higher education, article IX, section 7 does not reach these fines, Craven County notwithstanding.

I. The University Library Fines

All constituent institutions of UNC maintain libraries for the use of their students and faculty. To help preserve the library collections against loss and to ensure that library materials are currently available to students and faculty, the constituent institutions charge fees for late return of borrowed materials and replacement charges for lost items. In Fiscal Year 1995-96, the consituent institutions reported collecting a total of $840,674 in library fines. It is our understanding that these funds are used to maintain and replenish the library collections.

The Effect of Craven County v. Boyles on the Ownership of The Library Fines

Article IX, section 7 provides as follows:

All moneys, stocks, bonds, and other property belonging to a county school fund, and the clear proceeds of all penalties and forfeitures and of all fines collected in the several counties for any breach of the penal laws of the State, shall belong to and remain in the several counties, and shall be faithfully appropriated and used for maintaining free public schools. (Emphasis added).

The Craven County decision is the most recent of a series of Supreme Court decisions dating from the late nineteenth century that have addressed the issue of the scope of local school districts' entitlements to funds under article IX, section 7 or its analog in the 1868 Constitution (article IX, section 5). In Craven County, the Court held that monies paid to the North Carolina Department of Environment, Health and Natural Resources resulting from violation of civil statutory air pollution control standards constituted a "penalty" under article IX, section 7, and should be remitted to the local school district.

The Constitution itself does not define "penal laws." However, courts have traditionally characterized a law, whether civil or criminal, as "penal" if the law imposes a monetary payment on anyone violating its terms and if the purpose of that payment is punishment. 3 C. Sands, Sutherland Statutes and Statutory Construction, § 59.01, at 91 (5th ed. 1992). The North Carolina Supreme Court's decision in Craven County v. Boyles is consistent with that understanding. The Court affirmed that article IX, section 7 encompasses all monetary payments exacted as penalties that accrue to the State, regardless of whether they result from civil or criminal violations. Craven County Board of Education v. Boyles, 343 N.C. at 90 (citing State ex rel. Thornburg v. 532 B Street, 334 N.C. 290, 432 S.E.2d 684 (1993)). See also State ex rel. Hodge v. Marietta & North Georgia Railroad, 108 N.C. 24, 12 S.E. 1041 (1891) (holding that penalty accruing to State under civil statute is recoverable by local school districts).

Because a "penal law" is one that imposes a monetary payment as punishment for its violation, the courts have distinguished fines, penalties, and forfeitures from other sorts of payments, on the ground that they all are payments imposed as punishment. Thus, the specific nomenclature given to such monetary payments is insignificant. The critical factor in determining whether the monetary payments constitute "penalties, forfeitures, or fines" is not the label given the payments, but the nature of the offense that gave rise to them; i.e., whether the payments were imposed as the result of a breach of the "penal laws" of the State. Craven County v. Boyles, 343 N.C. at 92 (citing Cauble v. City of Asheville, 301 N.C. 340, 344, 271 S.E.2d 258, 260 (1980)). The Craven County Court concluded that the defendants' monetary payments resulted from an offense that was penal in nature. Therefore, the payments were deemed to be penalties subject to article IX, section 7, even though they were not designated as "penalties" in the settlement agreement.

Despite the breadth of the Court's construction of article IX, section 7 in Craven County v. Boyles, it is clear that Craven County would not support the proposition that this constitutional provision encompasses monetary payments accruing to the State that are imposed for some other purpose than punishment, such as remediation or restitution. Such types of payments would not result from a violation of "penal law" as the Court appears to regard it. See Shore v. Edmisten, 290 N.C. 628, 227 S.E.2d 553 (1976) (payments imposed for purpose of restitution to a governmental agency are not included in "clear proceeds" of fines under article IX, section 7); see also State ex rel. Thornburg v. 532 B Street, 334 N.C. 290, 432 S.E.2d 684 (1993), Meyer, J., dissenting (dissent concluded that certain forfeitures ordered pursuant to state RICO Act are remedial and not penal in nature and thus do not come within article IX, section 7). In Craven County, as in other recent decisions allocating funds to local school districts, the Court clearly perceived that the monetary payments at issue were intended as punishment for violation of a State civil or criminal law. See State ex rel. Thornburg, supra (forfeitures pursuant to state RICO Act were penal in nature and must be paid to public school fund); Mussallam v. Mussallam, 321 N.C. 504, 364 S.E.2d 364 (1988) (monetary payments from forfeiture of court appearance bond were penal in nature); Cauble v. City of Asheville, supra (fines city collected for overtime parking came within article IX, section 7 since imposed pursuant to city ordinance made penal by State statute).

The university library fines are distinguishable from the monetary payments in Craven County to the extent that they are assessed primarily for the maintenance and replenishment of the library collections rather than as punishment for failure to obey library regulations. In this respect, the library fines may be regarded as a means for furthering the Founders' constitutional directive that UNC encourage and promote "useful learning." Foy v. University of North Carolina, 5 N.C. 80, 83-84 (1805) (citing N.C. Const. of 1776, § 41).

The library fines may also be distinguished from fines, penalties and forfeitures subject to article IX, section 7 on the basis of their relation to other constitutional provisions concerning public secondary and higher education and their funding. The county public school fund established by article IX, section 7 is one of two separate funds the Constitution created to assist the General Assembly in carrying out the State's public policy to provide free public schools. N.C. Const. art. IX, § 2. However, the framers of the Constitution also directed the General Assembly to provide the State's citizens higher education that is "as far as practicable. . . free of expense." N.C. Const. art. IX, § 9. While article IX, section 10 establishes an educational fund for UNC, consisting of revenue from escheats, the constituent institutions' expenses so far exceed their income from that external source that the General Assembly has authorized them to generate revenue to help satisfy their constitutional mandate to keep tuition costs as low as possible. Given that the Constitution is to be construed as a consistent whole, Thomas v. State Board of Elections, 256 N.C. 401, 407, 124 S.E.2d 164, 169 (1962), it is our opinion that article IX, section 7 does not require funds — such as the library fines — generated within UNC, and used for the constitutionally required purpose of keeping the costs of university education as low as possible, to be diverted to the public schools in the county in which a constituent institution is located.

In summary, it is our opinion that, while a judicial exemption for the university library fines from article IX, section 7 cannot be predicted with certainty, such an exemption would be consistent not only with the Court's interpretation of the "fines, penalties and forfeitures" provision of article IX, section 7 in Craven County v. Boyles, but also with the constitutional mandate of article IX, section 9 for higher education at the lowest possible cost.

II. The University Parking Fines

Gen. Stat. § 116-44.4 authorizes the Boards of Trustees of the constituent institutions to establish ordinances for the regulation of traffic and parking on their campuses. The constituent institutions report that, as this statute permits, the funds they collect from violations of their ordinances are used for purposes relating to parking, traffic, and transportation on campus. In Fiscal Year 1995-96, the constituent institutions reported collecting a total of $3,766,102 in parking penalties.

The Effect of Craven County v. Boyles on the Ownership of The Parking Fines

As noted, the constituent institutions generate and use funds from violations of their parking ordinances under the authority and terms of Gen. Stat. § 116-44.4. This statute authorizes two different means of enforcing violations of the institutional parking ordinances, only one of which generates funds for the constituent institutions. N.C.G.S. § 116-44.4(g), (h) (1994).

First, by provision of Gen. Stat. § 116-44.4(g), violations of the ordinances may be treated as infractions (as defined in Gen. Stat. § 14-3.1). This enforcement mechanism operates outside of the institution. Infractions are prosecuted by the local district attorney in District Court, and any resulting penalties are imposed and collected by the court. N.C.G.S. §§ 15A-1114; 15A-1116 (1988). The proceeds of these penalties must be paid to the county in which the infraction occurred, for use of the local public schools. N.C.G.S. § 14-3.1(a) (1993).

Alternatively, the constituent institutions may enforce their parking ordinances by imposing their own civil penalties according to procedures the Trustees establish, including administrative sanctions. N.C.G.S. § 116-44.4(h) enables the constituent institutions, through internal administrative action, to collect and retain the funds resulting from violations of their parking ordinances. Not surprisingly, all constituent institutions reporting to us indicate that they have elected this manner of enforcement. Funds each constituent institution receives pursuant to its own enforcement mechanisms are to be placed in a trust account and may be used for any of the following purposes:

(1) To defray the cost of administering and enforcing ordinances adopted under [Gen. Stat. § 116-44.4];
(2) To develop, maintain, and supervise parking areas and facilities;
(3) To provide bus service or other transportation systems and facilities, including payments to any public or private transportation system serving University students, faculty, or employees;
(4) As a pledge to secure revenue bonds for parking facilities issued under Article 21 of [Chapter 116, "Higher Education"];
(5) Other purposes related to parking, traffic, and transportation on the campus.

N.C.G.S. § 116-44.4(m) (1994).

Since these funds accrue to UNC, an agency of the State, and are imposed as a manner of punishment for violation of civil ordinances, the Supreme Court's broad definition of "penal laws" in Craven County might initially appear to encompass them. However, a critical distinction exists between these parking fines and other fines or penalties our courts have held to be within the reach of article IX, section 7. Unlike any of those fines and penalties, the university parking fines generated by means of Gen. Stat. § 116-44.4(h) are legislatively designated, pursuant to express constitutional authority, for a purpose other than the funding of the local public schools: the maintenance and administration of The University of North Carolina.

Article IX, section 8 of the North Carolina Constitution provides as follows:

The General Assembly shall maintain a public system of higher education, comprising The University of North Carolina and such other institutions of higher education as the General Assembly may deem wise. The General Assembly shall provide for the selection of trustees of The University of North Carolina and of the other institutions of higher education, in whom shall be vested all the privileges, rights, franchises, and endowments heretofore granted to or conferred upon the trustees of these institutions. The General Assembly may enact laws necessary and expedient for the maintenance and management of The University of North Carolina and the other public institutions of higher education. (Emphasis added).

It is clear that Gen. Stat. § 116-44.4 is an exercise of the General Assembly's authority and discretion granted by article IX, section 8, evidencing the intent to provide the means for administering the traffic and transportation aspect of the University's "maintenance and management." Therefore, Craven County notwithstanding, we believe that article IX, section 7 cannot properly be read to invalidate Gen. Stat. § 116-44.4(m), thereby depriving The University of North Carolina of revenues generated internally and used pursuant to the specific grant of legislative authority in article IX, section 8.

In article IX, the framers articulated educational policies of apparently equal priority in favor of both public higher education and public secondary education, together with funding mechanisms for the support of each. Clearly, one such provision of the Constitution cannot be in violation of another. Martin v. State, 330 N.C. 412, 419, 410 S.E.2d 474, 478 (1991). In creating a class of penalties specifically devoted to funding UNC, the General Assembly was certainly aware of article IX, section 7. See N.C.G.S. § 116-44.4(g) (providing for infraction means of enforcement). Addressing the question of whether Gen. Stat. § 116-44.4(m) conflicts with article IX, section 7, the courts would be required to presume such awareness and resolve in the statute's favor all doubts concerning its constitutional validity. E.g., State v. Pool, 74 N.C. 402, 405 (1876); Lowery v. School Trustees, 140 N.C. 33, 40, 52 S.E. 267 (1905); State v. White, 58 N.C. App. 558, 559, 294 S.E.2d 1, 2 (1982).

Therefore, it is our opinion that the university parking fines, which are governed by article IX, section 9, do not come within the "fines, penalties and forfeitures" provision of article IX, section 7. Accordingly, Craven County is not applicable to revenues generated under Gen. Stat. § 116-44.4(h).

Andrew A. Vanore, Jr.
Chief Deputy Attorney General

Celia Grasty Jones
Assistant Attorney General